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First-time homebuyers see new opportunities, challenges in pandemic economy – The Globe and Mail

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With mortgage rates at historic lows and price growth tapering in certain markets, the COVID-19 pandemic has presented both opportunities and challenges for first-time homebuyers.

New buyers are seeing condo prices come within reach in downtown areas awash with vacant high rises. But young families are also being priced out of starter homes in suburbs at a faster rate.

“From first-time homebuyers what I’m seeing is a lot of people reaching out, really since the summer, and trying to understand: Is it the right time for them to buy?” said Patrick McKinnon, a sales representative at One Group Toronto Real Estate.

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“They’re seriously considering doing so now while they still have the opportunity . it is the best time it’s been to buy all year.”

For the group of buyers drawn to entry-level condos, McKinnon says, the conditions are ripe. Buyers, often in their 20s, have an opportunity to live downtown or potentially have a rental property down the line.

But for buyers who spent their 20s and early 30s renting in cities and are ready to settle down, there aren’t too many deals to be had. Suburban markets that were once affordable are now out of reach as existing homeowners, armed with big gains on equity in their properties, bid up suburban homes.

In the Greater Toronto Area in November, prices were up nearly 20 per cent year-over-year in Durham region, more than 22.5 per cent in Oshawa, Ont. and nearly 14 per cent in Brampton, Ont. Considering the average home price in the Toronto area has more than doubled, growing from $395,234 to $819,288 between 2009 and 2019, equity can be an advantage.

Brampton real estate agent Bethany King said that of all the homebuyers she sees, first-time purchasers are in the toughest spot.

“With so much pent-up demand, our entry-level pricing has officially shifted, and it’s becoming more and more expensive for them,” said King, a team leader at Century 21 Millennium Inc. brokerage.

The Quebec Professional Association of Real Estate Brokers has highlighted a similar trend, noting that adults aged 18 to 34 are now less tethered to a physical workspace, as COVID-19 has widened acceptance of work from home. But as the suburbs become more career-friendly, this same group is more likely to have had their finances negatively impacted during the pandemic, the real estate association said.

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“(Experienced) buyers are in a better financial position to take advantage of real estate market opportunities and move up in product and price,” said Charles Brant, director of market analysis at the QPAREB, in a statement this month.

While Canadians generally saved more money during the pandemic, Statistics Canada noted that millennial-led households faced greater economic risk this year. These younger workers, Statistics Canada said, have higher costs of entry to housing and less equity in financial and real estate assets – and are also more likely to work in industries more deeply impacted by the pandemic.

“Now, the overall affordability is better with these lower interest rates, and so that’s why we’re seeing people purchase (homes),” said Paul Beaudry, Deputy Governor of the Bank of Canada, in a recent question-and-answer session.

“The difficulty is really down payments for young people. If you can get in, it’s not that costly to carry the cost of a house in terms of the interest rate cost. What’s hard is actually getting in.”

Ottawa has taken note. The government’s fall economic statement said it would expand eligibility for the first-time homebuyer incentive by raising the maximum house price for the incentive from about $505,000 to about $722,000 next year.

An online poll released by RBC this month indicated that Canadians were willing to give a child or family member an average of $60,513 to help them buy a home, as about 58 per cent of respondents said it was almost impossible to buy a home on their own. Nonetheless, about 81 per cent of respondents said homeownership was a good investment.

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According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.

That draw to buying a home as an investment comes even as the average rent for Canadian properties listed on Rentals.ca fell more than nine per cent between November 2019 and November 2020.

Prospective buyers who may be under the impression that real estate prices only go up should consider the plight of those who bought condos in Toronto before prices fell this year, cautioned Hilliard MacBeth, an investment adviser and author of “When the Bubble Bursts: Surviving the Canadian Real Estate Crash.”

While prices may be coming down for city condos, MacBeth said maintenance fees, insurance and taxes can still make them far from affordable compared to rentals. Plus, he says, young buyers could find they don’t have the equity to move up in a few years, if prices fall more.

“A whole bunch of first-time buyers from five years ago, and three years ago and two years ago, that bought these condos in the centre of Toronto – now they’re stuck,” says MacBeth.

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China Says Its Economy, Recovering From The Pandemic, Grew 2.3% Last Year – NPR

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People walk in Wuhan on Jan. 10, the eve of the first anniversary of China confirming its first COVID-19 death. Chinese officials said on Monday that its economy managed to grow 2.3% in 2020.

Nicolas Asfouri/AFP via Getty Images

Nicolas Asfouri/AFP via Getty Images

Just over a year after the world’s first coronavirus cases were identified in China, the country’s economy has bounced back from the ravages of the pandemic.

China’s economy grew by 2.3% last year, according to data published Monday by the country’s National Bureau of Statistics. The steady economic recovery was largely expected, and puts China on a track that other countries haven’t achieved.

“It’s likely that China could be the only major economy that has significant positive economic growth in 2020,” Nicholas Lardy, a China specialist at the Peterson Institute of International Economics, told NPR in May. “The U.S. is clearly going to be negative. Europe is negative. Japan is going to be negative.”

When the pandemic first hit, however, China’s economic outlook was a lot less sunny.

Thanks to sweeping and strictly enforced lockdowns, the country’s year-on-year GDP for the first three months of 2020 shrank 6.8%, its biggest drop in decades. And as the economy constricted and unemployment rates rose, officials in the spring took the unprecedented move of scrapping their annual economic growth targets.

As the year progressed and the pandemic receded in China, the country saw an economic upturn helped largely by an increase in consumer spending. Its GDP went up by 3.2% in the second quarter, 4.9% percent in the third quarter and 6.5% for the fourth quarter.

China also reported a record $75.4 billion surplus in November, after exports to the rest of the world jumped $21.1% compared to the previous year. As NPR’s Scott Horsley reported, much of that increase was accounted for by exports to the United States, despite the tariffs imposed by President Trump.

Still, an English translation of the statistics bureau report noted that “the changing epidemic dynamics and external environment pose a multitude of uncertainties and the foundation for economic recovery is yet to be consolidated.”

As NPR’s Emily Feng has reported, Chinese policymakers have pledged to continue policies that support private businesses and consumer demand, but will scale back certain credit-boosting policies in the months ahead.

The country has largely managed to bring the pandemic under control, allowing many businesses to reopen at pre-pandemic levels, according to Feng. And it still imposes strict lockdowns in regions with an uptick in cases: As of mid-January, a cluster of more than 600 cases in Hebei province has prompted the lockdown of some 11 million people.

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Brent crude edges up as optimism over economy trumps demand concerns – TheChronicleHerald.ca

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By Florence Tan

SINGAPORE (Reuters) – Brent crude futures edged up on Tuesday as optimism that government stimulus will buoy global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally could cool fuel consumption.

Brent crude futures for March rose 20 cents, or 0.4%, to $54.95 a barrel by 0351 GMT after slipping 35 cents in the previous session.

U.S. West Texas Intermediate crude was at $52.19 a barrel, down 17 cents, or 0.3%. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.

Investors are upbeat about demand in China, the world’s top crude oil importer, after data released on Monday showed its refinery output rose 3% to a new record in 2020. China was also the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic.

“Yesterday’s data out of China was a positive for oil prices,” Michael McCarthy, chief market strategist at CMC Markets in Sydney said.

Investors are watching out for U.S. President-elect Biden’s inauguration speech on Wednesday for details on the country’s $1.9 trillion aid package.

OANDA’s Asia-Pacific senior analyst Jeffrey Halley said: “Like other asset classes, oil has received a gentle U.S. stimulus tailwind in Asia.”

Oil prices have also been supported by Saudi Arabia’s additional supply cuts in the next two months which are expected to draw down global inventories by 1.1 million barrels per day in the first quarter, ANZ analysts said.

Concerns about rising COVID-19 cases globally and renewed lockdowns weighing down fuel demand kept a lid on oil prices.

ANZ analysts flagged concerns about falling fuel sales in India in January from December and rising COVID-19 cases in China and Japan that could dampen oil demand.

“In Europe and the U.S., the slow rollout of vaccines is also raising concerns that a rebound in demand will remain elusive,” the bank said.

(Reporting by Florence Tan; Editing by Richard Pullin and Kenneth Maxwell)

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Brent crude edges up as optimism over economy trumps demand concerns – Cape Breton Post

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By Florence Tan

SINGAPORE (Reuters) – Brent crude futures edged up on Tuesday as optimism that government stimulus will buoy global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally could cool fuel consumption.

Brent crude futures for March rose 17 cents, or 0.3%, to $54.92 a barrel by 0150 GMT after slipping 35 cents in the previous session.

U.S. West Texas Intermediate crude was at $52.25 a barrel, down 11 cents, or 0.2%. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.

Investors are upbeat about demand in China, the world’s top crude oil importer, after data released on Monday showed its refinery output rose 3% to a new record in 2020. China was also the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic.

“Yesterday’s data out of China was a positive for oil prices,” Michael McCarthy, chief market strategist at CMC Markets in Sydney said.

Investors are watching out for U.S. President-elect Biden’s inauguration speech on Wednesday for details on the country’s $1.9 trillion aid package.

Oil prices have also been supported by Saudi Arabia’s additional supply cuts in the next two months which are expected to draw down global inventories by 1.1 million barrels per day in the first quarter, ANZ analysts said.

Concerns about rising COVID-19 cases globally and renewed lockdowns weighing down fuel demand kept a lid on oil prices.

ANZ analysts flagged concerns about falling fuel sales in India in January from December and rising COVID-19 cases in China and Japan that could dampen oil demand.

“In Europe and the U.S., the slow rollout of vaccines is also raising concerns that a rebound in demand will remain elusive,” the bank said.

(Reporting by Florence Tan; editing by Richard Pullin)

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